THE COMMISSIONER OF INCOME TAX-III, HYDERABAD. vs. M/S ANURADHATIMBER ESTATES, HYDERABAD.

[ 348e 1 ]N THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD TUESDAY, THE NINETEENTH DAY OF AUGUST TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE SUDDALA CHALAPATHI RAO INCOME TAX TRIBUNAL APPEAL NO: 53 OF 2010 lncome Tax Tribunal Appeal Under Section 2604 of the Income Tax Act,1961 against the Order dated 28-12-2007 passed in l.T.(S.S)A.No.85/Hyd/2002 for the Block period 1 988-1998 on the file of the lncome Tax Appellate Tribunal, Hyderabad Bench'A', Hyderabad. ...Appellant AND M/s Anuradha Tirnber Estates, Plot no.g7lA, Road no.14, Jubilee hills, Hyderabad. ...Respondent Counsel for the Appellant: Ms. B SAPNA REDDY (Sr. SC FOR INCOME TAX) Counsel for the Respondent: _ _ _ _ The Court made the following: JUDGMENT Between: The Commissioner Of lncome Tax-lll, l.T.Towers, A.C.Guards, Masab Tank, Hyderabad.

HON'BLE SRI JUSTICE P.SAM KOSH\ AND HON'BLE SRI IUSTICE SUDDALA CHALAPATHI RAO INCOME TAX TRIBUNAL APPEAL NO.53 OF 2O1O IUDGMENT: (Per I'ton'bte Si Jtlsti@ Suddoia Chatapathi Roa) The above appeal has been filed by the appellant/revenue challenging the order passed by the Income Tax Appellate Tribunal, I{yderabad Bench-A, Hyderabad (for short, 'ITAT') in I.T.(S.S). A. No .85 / Hy d / 2N2, dated 28.12.2W7, where j n the I'[AT has allowed the appeal of the respondent/assessee holding out that ir-r view o[ Sec tion 158 BE of lhe Income Tax .\,]t, i9i:i itur short, 'Act'), the order passed by the appellant/ revenue hert in rs barred by limitation and, therefore, set aside the rrrder t1a tci-l 28J72(n2 passed by the Commissioner of Income-l ax (Appc'alsl IV, Hyc{erabad for the block period from 01.09.1988 to 1,1.07. l99lt Challengi,ng the same, the appellant has filed above aL''[tai raising the grounds of appeal and also substantial cluestions of follolving substarrtial questioru of lavr,, rvhich is ir-nP,-' r'.,r t ir', i.r I detern-rirred in the above appeal. law. This l{on'ble Court was pleased to admit the same ou the

2 "In the facts and circumstances of the case where the last of the search warranb is executed on 10.09.1998 and'the Assessment was completed on 28.09.2000, which is well within the two year prescribed period under Sectionl 58 BE (1)(a) of the Income Tax Act 1961, whether the orders of the ITAT referring to execution date of last warrant as 14.07.1998 and is finding that the assessment orders are barred by limitation in terms of Section 158 BE (a)(b) of IT Act, is not erroneous and pewerse in law." Counsel for Income Tax Department and though notice was issued to the respondent/assessee and personal notice was to the respondent/assessee was also taken, there was no representation for the respondent/ assessee. 3. The appellant/Revenue submittecl the irnpugned order passed by the ITAT is perverse and contrary to Explanation 2(a) to Section 1588E(2Xb) of the Act. Further it is contended that in the instant case/ the notice of search warrant was issued on 10.09.1998 and the assessment order was passecl on 28.09.2000 '[ he period of two years should be computecl frorn the last clay of the month on which last panchanama was drawn i.e., from 10.09.1998 and as per Section 15888(2Xb), Explanation 2(a), the period of two years should be countecl from the last clay of 2. Heard Ms. B.Sapna Reddy, Iearned Senior Standing

3 { month, on which the assessment was concluded which was on 10.09.1998 i.e., the limitation of two years should start from 30.09.7998 and in the instant case, the assessment order was passed on 28.09.2000, which is well within the limitation as per the above provision and as such, the impugned order of ITAT is contrary to law and in violative of the above said provision of law and also reliance was placed on the judgment of the Hon'ble Apex Court in Anil Minda v. Commissioner of Income-Tax1. 4. Per contra the Case of the respondent/assessee is that the appellant/ revenue initiated a search by issuing warrant of authorization on 10.07.1998 and the last authorization was issued on 14.07.7998 and as such the limitation for passing of the assessment ortler would start from last day of the month i.r,., from 31.07.1998. therefore, under Section 1588E(2Xb) Explanation 2(a) of the Ar t, the block assessment order ought to have been passed on or beforc 37.07.20fl0 and as the assessment order was aclmittecily p;rssr.d on 28.09.2000 i.e., after expiry of two years from the date of last day of month of the authorization, which is contravention to Section 1588E(1Xb) with Explanation 2(a) and 1 (2023) 148 tnxrnann.com 407 (sc)

4 ITAT accepting the impugned same the ITAT has held that assessment order is barred by limitation and allowed the appeal accordingly, the order passed by the Commissioner of Income Tax (AppeaIs)IV, Hyderabad, dated 28.02.2002 was set aside by the ITAT. 5. In view of the above submissions by the appellant/ I{evenue anci as well as the findings of the ITAT, it is necessary to extract the provision of Section 1588E of the Act, which read as under: "Section 158BE Time assessment- limit for completion of btock (1) The order under Section 1588C shall be passed, - (a) xxxx (b) xxxx (2) 1'he period of limitation for completion of block assessment in the case of the other person referred to in section 1588D shall be- (a) xxxx; antl (b) two years from the end o{ the month in u.hich the notice under this Chapter was served on such other person in rcsper:t of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st rlav of January, 197.

5 / Explanation-l: In computing the period of liniitation for the purposes of this section, - (i) xxxx; or (ii) xxxx;or (iii)xxxx or (iv) xxxx Provicled that where imrnediately after the exclusior-r of the aforesaid period, the period of limitation referred to in sub- section (1) or sub-section (2) available to the Assessing Officer for making an order under clause (c) of section 158BC is less than sixty days, such remaining period shall be extencled to sixty davs artd the aforesaid period of limitation shall be deemed to be extended accordingly. Explanation.2: For the removal of doubts, it is hereby declared that the authorization referred to in sub-section (1) shall be deemed to have been executed, - (a) in the case of search, on the conclusion of search as recorded in the last panchana.ura drawn in relation to any person in whose case the warrant of authorization has been issued ; (b) xxxx " 6. The Sub-section 158 BE Sub-Section 2(b) and Explanation 2(a) of the above provision states that the period of two years shall be calculated from the end of month in which the last panchama notice is served and the Hon'ble Supreme Court has also categoricallv hetd the same in the case of Anil Minda ,/ \ 01.U.1."1997 arrd the notice o[ [ast panchanama was issued on / (supra). In the instant case, the search is conducted after

6 10.09.1998 and the period of limitation would start from 30.09.1998 i.e., two years from the last day of the month and the Assessment Order was passed on 28.09.2000, we are of the view that the Order of Assessment is valid and is well within the period of limitation in view of Section 158BE(2)(b) and Iixplanation 2 (a) of the Act. Hence, we hold that the order passecl by the ITAT is illegal, perverse and liable to be set aside. 7. [n view of the above finding, impugned order passed by the ITA1 in l.T.(S.S.)A.No.85/Hydl2002, dated 28.12.2007 is hereby set aside, and the competent authority is at liberty to take steps accordingly 8. ,\ccorc{ingly, the above Appeal is allowed. There shall be o ortler as to costs. Miscellaneous applications, pending if any, shall stand closed SD,. K. SRINNASARAO JOINT TRAR REgls /q oMOF one Fair ""o6:? [[: I:S:l..fX,lJ"H'JJ:f'5''^M KosHY /[RUE COPY'/ And SECTI FICER one Fair copv to *",F.,',",il"iTlj|'.|:'fi:.tH3P'*'i .HALAPATHI RAo To 1. The rncome Tax Appe*ate Tribunal, Hyderabad Bench'A" Hyderabad' i lilL?J.&retary' unron or lndia' Ministry or Law' Justice and companv Rtfui", New Delhi

x HIGH COURT DATED: 19tO8t2O2S JUDGMENT |TTA.No.S3 of 2010 ALLOWING THE ITTA \ 4' t) 't- '.\ c,il i// +t'r// ,i/ 29 CITg :,.ar6uf.D- ) -=:-==:'Z' .d&a Ao h- \